The Vultures Are Circling Russian Debt

Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio, or watch us on YouTube search Bloomberg Global News. All right, gotta say this story caught my attention reading in this morning, especially as I keep trying to understand Russian President Vladimir Vladimir Putin's ultimate intentions and his rational rationalizations for the invasion in war

with Ukraine. Most would argue there are no rationalizations for this um, but it leads us to this Bloomberg Opinion columnist by Leonide Borshitski, who writes about this today. Leonard Borshitski is a column this or Bloomberg Opinion. He joins us now on the phone from London. The opinion column available on the Bloomberg terminal and blue dot com. Putin's new alter ego is Igor Stralkov uh Igor Stralkov Leonard. It's also known as Igor Ghirkin, his name that he's

known by his Stralkov though. Who is he Um? He's a Russian UM veteran of both the military and special services, and he's a historian by education, and he's got a UM a pretty long history as a volunteer and all

sorts of local concerts from Yugoslavia to transm Austria. UM. He's a you know, a Russian US from nationalistm monarchist, and he Um basically single handed we started the war in eastern Ukraine and two thousand fourteen, according to both himself and many others who were you know, who covered those events, m he Um crossed the Russian Ukrainian border April from thousand fourteen with a tiny force of about fifty people and went on very quickly to become the

defense minister the so called Dominic People's Republic, which is one of these unrecognized stateless in the east of Ukraine that Russia has backed and that Russia is basically waging this war extensively to defense. Lean, did we know you're at an event in London? So we really appreciate you squeezing in because I really feel like this is such an important column to bring to our Bloomberg audience. Why is it that you think it's important that we understand about,

as you termed it, Putin's new alter ego? Is this guy? Why is it important that we understand about this guy? I mean, are they friends? And how does he ultimately potentially impact Vladimir Putin, whether in his thinking or in his actions? Um? Well, he UM still coost motivation UM always had to do with a sort of vision of an imperial Russia that has never really existed outside of UH certain nostalgic literature. UM. And this is the empire that uh he has always wanted to put into rebuild.

And that's what by going into Ukraine into thousand fourteen, he tried to provoke Russia into doing into invading um all of Ukraine, and UH the nexting large parts of Ukraine that are Russian speaking. And so he had um sort of the ideological way, the ideological foundations of what Putting is actually doing. Eight years later, UM, he's uh sort of carrying out a plan that Croppo will back and fourteen, but that wasn't really accepted. Uh so was considered too much of a sort of a romantic French

figure for the Kremlin. And the Kremlin was much more pragmatic back then, and once it's keep working relationship with the West, didn't want to subject itself to um, you know, to to hell Is sanctions, and so the men's deals were made in two thousands, fourteen months fifteen um. Now that it is all out the window and so Putton has basically gone all out so both Well, that's something that really stuck out to me from this column, Leonard. You wrote that the President Putin appears to be past

caring about the open economy. He certainly cares little about the fortunes of the wealthiest Russians, those billionaires who have been sanctioned by the United States, the EU and the UK. This term though, empire or death. That really stuck out to me. What does that mean to Vladimir Putin? Well, that is it's it's really a new kind of behavior for him. He was always a cautious risk taker. Uh he never went far enough to to break off ties

um with the with the West. Uh, and to completely cut off the Rustional League from the West and the rest of the Tienship as well. Um. It's you know, it was always seen as a kind of okay, a strong and maybe that someone with strong authoritarian tendences, maybe even a dictator, but uh, still a European ruler. You could compare him with someone like the Toorban and Hungary or the the Polish nationalists. Uh uh, but this is no longer true. Um. He has sort of crossed every

read line. He doesn't care about. Um. You know what people think of him externally, and this is you know, this is Russia turning inward in one sense and expanding militarily in another. Uh, rebuilding the empire, thanking everything on this on this um um you know, the military advent right if it certainly feels like defeat is no option. Um. Leonid Bressitski, thank you so much, really appreciate you weaning in. He is columnist of Bloomberg Opinion, joining us on the

phone from London. A Bloomberg Opinion colonist, he was also a founding out of the Russian business deliver. Maatski also did the recent translation of This Is Bloomberg. You're listening to Bloomberg Business Week with Carol Measure and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Top two stories on the Bloomberg in the past sixty minutes. They have to do with Apple. Apple working to bring more financial services

in house. That's an exclusive, buyer Mark German. Also that Apple and Meta giving user data to hackers who fortunately go requests also a Bloomberg exclusive. Mark German is a technology reporter. He covers all things Apple, Peloton and more. He joins us live from the Bloomberg Los Angeles Bureau. Mark another day, another exclusive. Grateful to have you with us this afternoon. When you say financial services, what do you mean when it comes to Apple? What are they

working on? Yes, so Apple's working on a few new fintech services. One would be a buy now later service to compete with the firm and some of the other companies, allowing you to buy something and pay for it over time. Other elements of financial services would be their iPhone hardware

subscription service that they're developing. Um By financial services in the house, what means the underlying fintech infrastructure right Apple has been using partners like Golden Sack, some Core Card, and green Dot Bank to power their current financial offer offerings, which is basically Apple pay Um and some of their other offerings like a wallet app and the Apple Card. And then they're also working to create their own payment processor, right that is the very core of credit cards or

other fin sech platforms sending transactions to banks for approval. Right, So they're going to be bringing that all in the house over the long term. What's the endgame mark for Apple here? What's what's the big aspirations with this? The big aspiration is to own the whole widget, right Apple, as you've seen with their software and their hardware, they like to do everything in the house, right, So that's

owning all the underlying components. Now Apple wants to do the same thing with it for their financial services because they know how critical that is to the company's future and all these other buy now, pay later, debit card, all the other things that they're that they're working toward. Okay,

are they going to alienate some some partners here? Goldman Sachs is the company that they work with on the Apple card, right, Well, you'll see it's probably likely that when they expand the Ample cards to other regions, they won't be working with Golden Secs. Core Card is their payment processor for the Apple Card. They probably won't be working with them for future fintech products. They'll be using

their own core processor for that. Uh. And then when you see green dot bank for the Apple Cash card in the US, you'll probably see different partners outside of the US, right, no, go ahead, I'm sorry. Yeah, I don't think those three partners are going to disappear today or in the near term for like the current offerings, but for future offerings you'll see new partners. How much of this mark too, that was about making the iPhone, which come on to be fair is pretty expensive and

making it more accessible to a wider audience. Perhaps you might pass because of the cost. The definitely the buy now, pay later and the iPhone hardware subscription service that those are both designing to allow people to buy not only Apple products, but third party products right from third party merchants to be able to buy products and pay for them over time in order to drive down the upfront cost. So this is definitely gonna help their revenue, right, this

is gonna juice revenues. They're gonna be making more per customer on an annual basis because of this, and they're also going to be driving traffic to more merchants because of this. So I think it's a win win for Apple, for mergency and for consumers. Is it a surprise that all that Apples moving further into this, I mean it was a big deal when Apple launched the Apple Card and partner with Golden Sacks toad and did Apple Pay. Yeah, I don't think so. I think over time they like

to expand their offerings. So when they first entered Apple Pay, they said their goal was to replace everything in your wallet, and they're doing so much now, from digital i ds to this wallet app to Apple Pay, to Apple Cash, to peer to peer payments. So it makes a lot of sense to me that they're going to be, you know,

sort of spreading their wings here. And I'm interesting interested to see how well Apple Pay later, this by now pay leader service they're working on takes off mark what we have you want to get you too, just in the last minute that we have you to touch on this. Another exclusive about Apple, this one by our colleague William Turton, about Apple and Meta giving user data to hackers who forged legal requests. Um, what do we know about what

happened here? This is actually fascinating. So right now, if you're a law enforcement agency, you can reach out to Apple or Meta or other companies to get data if you're doing a criminal investigation. And so what these hackers did is they pretended to be law enforcement. They contacted Apple and other companies asking for data on you know, random people or random to us, but not random to them, I'm sure, and in some of these cases that data

was actually received. Obviously, this is a big breach, um and so great story by William on that I would encourage anyone to read that as well. Unbelievable. All right, Um, Mark Ivan, thank you so much, So glad we could

get to the stories we mentioned. The top two stories on the Bloomberg terminal at this hour has to do with Mark's exclusive on for j Moore into financial services bringing them in house Apple, and then of course on that Apple Meta giving out some data from their users to hack tow hackers, and unbelievable Mark story moving stocks, payment stocks slumping this afternoon after Mark wrote that story. Yeah, exactly. This is Bloomberg Business Week with Carol Messer and Bloomberg

Quick Takes Tim Stenovic on Bloomberg Radio. This week's international cover of Bloomberg business Week magazine. Quite a cover image, I might point out as well, about the financial vultures tapping into what maybe the opportunity of a lifetime. Here come the vulture. That's the cover of the international edition at Bloomberg Business Week. The story. It's by Eric Schatzker, Editor at Large at Bloomberg Bloomberg News. He's with us

in the Bloomberg INTERACTI Broker Studio. Also joining us remotely Joel Webber, editor at Bloomberg Business Week. So, Joel, what is the opportunity that some hedge funds are seeing when it comes to Russia's invasion of Ukraine. Let me just say that this is a product of first and foremost returned to office. So for all of those bosses out there wondering why r t O is a thing, is a product of Eric and I having a brief conversation

about Russian dead and me saying like who is buying stuff? Oh, Meaning that the only reason this story came together is because you guys physically saw each other in person. Well, when Joel and I you know, hang out by the water cooler, we typically talk about Russian dead I hope the and and Eric was like, you know, let me make some calls and see what we can come up with.

And and it is a story that I think we've all been wondering about, because this stuff is the thing that if, if there's ever going to be a buying opportunity, Russian debt could be a thing that, as as Eric writes, becomes a once in a lifetime thing. But you know, really this is a there's a whole morality quandary that comes into play because it's it's really something that you want to profit off of. And the answer is if the numbers are probably big enough, yes, right Eric, Hey,

it's complicated. Um, you definitely do have to get over the moral hump um. And then of course you have to do what every credit investor does, which is evaluate the various scenarios that may unfold and and figure out whether you're gonna get paid or not one way or the other, whether you get paid by coupon, whether you get repaid in principle, or whether you end up having to go to court and try to seize assets from somebody.

But that you know that standard distressed fair. What makes this so unusual and perhaps even a maybe I wouldn't even say, perhaps a more extreme case than others, such as say Venezuela or sovereign defaults like Ecuador for example, is that this is a product of a hostile invasion. We haven't seen anything like this in the Western world,

as many people have said, since World War Two. And that's a whole different calculus than deciding whether you want to do business with a dictator, for example, that's what some people think of Nicolas Manduro and Venezuela as or whether you want to profit off what other people may describe as a humanitarian crisis in a country like Sudan.

Those are different calculations. This is something altogether unfamiliar well, and we know in the financial community though, where there's money to be made, you can find people who want to tap into that. In your conversations, though, Eric, you know, was it overwhelmingly people like this is an opportunity for us? Or were there those who said, I don't even want to touch this. Both, Uh, there are more people who are not touching this for a couple of reasons. Then

there are people who are touching it. The two reasons are I just can't go near this, as Hans Humes, whom I quote, or distrust. That investor whom I quote in the story says, this is just to grotesque for me um. And there are others who are being told by their clients pension funds, for example, or endowments that have a principled stance on this issue. I want you to sell down Russia right now. It is difficult to find people who are buying Russian debt, which is not

because they're not buying. It's because they're not talking about it and they don't want to be public about it. Nobody wants to be public about it. In fact, that people whom I spoke to who are buying Russian debt would only speak to me on the condition of anonymity because they know that there is this public approprium waiting out there for them. You know, they're gonna be called vultures, They're gonna be hanged in the court of public opinion

at least now. But yet there's still this is a there is a textbook, sort of distressed debt playbook here, Eric and and when you talk to the people who are are skilled at wielding that that playbook. What are they what are they exactly looking for? And where are they what are they snatching up? What they want is again confidence that this is gonna be money good UM.

And of course the most extreme scenario in any distressed play is do I have to go to court and do I have to try to arrest assets from the debtor? And in this case, they're looking at Russian companies that have significant operations in the West, like Luke Oil, for example, We've all seen those gas stations UM, which has assets in the United States, it has assets in Italy, it has assets in Spain, its assets in Bulgaria. Luke Oil

issued bonds in the Netherlands under British law. So in that scenario, and Luke Oil isn't the only one, maybe I don't have to bet on the Russian sovereign, which may even to some distressed guys feel distasteful. I can buy a Russian corporate and if Luke Oil were to default, I can go to a court that's operating under British law and I might quite reasonably gain control of some very valuable assets in the process. Now that's a long term play. They're clearly hoping to make money in a

different way. Either they just get paid out in big fat coupons because they bought when the yields were high, or they get their money back because actually low oil doesn't default. Or perhaps the bonds get re rated because the rest of the world begins to see things through the same lens and the bonds trade up in value, And that in fact has been happening. So it's possible that some of these people who got in in the

early days of March are already out. You feature a tweet from Bill Browd or the anti Kremlin activist who said, it's like asking if you should buy German equities during the Holocaust, So a big no from him. Even though these folks spoke to you, uh without the on the condition of anonymity, how do they rationalize there? And they don't see it quite the same way. It's so interesting, how you know, the just the arguments in favor of the justification, if you will, is very interesting, and you

can choose to subscriub gribe to it or not. But for example, as I said, some of them say, I'm willing to participate in Russian corporate debt, but I won't touch Russian sovereign debt. I also won't touch Russian equities because being a source of equity capital for the Russian market, in their mind, is tantamount to supporting the regime. But buying the bonds when all you want is to be

paid back is different. And it's different as well because again in their calculus and their rationalization, if you allow Russian oligarchs to walk away from their all obligations, who wins there? Right? That's that's part of Now there's a counter argument to that. I'm not going to go into it, but that's some of the reasoning that gets applied, uh to sort of counter if you will, the moral weight of opposition. Well, this is this week's international cover story.

Are thanks to Eric Shasker, Editor at large up Bloomberg, and of course I thanks to Joe Webber, editor of the magazine. You're listening to Bloomberg Business Week with Carol Masser and bloom Burg Quick Takes Tim Stinovic on Bloomberg Radio. So chief financial officers, Yeah, they now play a critical role in shaping corporate strategy and really positioning organizations to meet future challenges. Bloomberg's new monthly Program's called Chief Future

Officer on Bloomberg TV. It profiles these leaders and explores the impact they're making on their companies and industries. For this week's episode, I caught up at Chippotle CFO Jack hard Tongue. In this excerpt, he talks about higher costs and more. You'll also hear from Nicole Miller Regan. She's a Piper Standard analyst. She too weighs in on the company. And the other thing I think is to make sure you have a strong balance sheet to make sure you

can weather the storm. And we've had a strong balance sheet. We've never had debt. We've a always had more cast in the balance sheet than we need for our normal ongoing business. And that has come in you know great, you know, really handy. Chipotle carries no long term debt and it's free cash flow almost tripled in When you think about the future, how do you take advantage of this? And it is the flexibility that that enables. What it really affords us is we're going to be able to

invest in our future no matter what. Like we accelerated are Open, We accelerated our pursuit of new restaurant sites during the pandemic when some of the restaurant companies were laying off their development team. Chipotle not only expanded its footprint over the last two years, it reshaped its restaurants. A ventured to drive through dining that began several years ago became a thriving profit center when the pandemic struck. The thing that's changed the most is just most of

our restaurants and now have a Chipotle lane. So three years ago we had maybe five or six Chipotle lanes, and now we have over three, and of our new openings have each pow lane. The sales and our chipot Land restaurants are higher, and our margins are higher too, because the digital orders are our highest margin transaction. And when you can serve the customer through the spot lane without the delivery fees that we pay in the customers pay,

it's it's it's a great margin opportunity for us. The convenience of Chipotle lanes contributed to soaring digital sales in There was little erosion in even as in restaurant sales return to levels. Meanwhile, membership and loyalty programs has boomed, giving Chipotle valuable insight into its customers. Omni channel preferences. What we've seen is that our digital customers, they come the most often and they spend the most of its time they come. Customer loyalty could face a test if

inflation continues to push higher. Chipotle hiked menu prices roughly nine Jack Hartung says, it's not just wages and food costs that are putting on the pressure. It's hitting everything. Sitting materials too for our restaurants or a new restaurants are costing more as well. You guys have had incredible pricing power. Is there kind of a tipping point where it's like enough? We haven't seen it. Um. Why is that? Jack? Well, part of it is um. We've over the year has

been slow to raise prices. We've always tried not to go to the menu board to raise prices. Whenever we've had a challenge from a cost standpoint, we'll do other things to try to find efficiencies somewhere along the line. We raise prices. In the second quarter of last year, we did that just to cover the cost of raising wages. We raise wages up the fifteen dollars. It was an average of increase and we raise prices just to cover the dollar costs of that, so we didn't increase our margins.

Our margins actually went down, but our profitability stayed the same. Our customers actually said, we really applaud what you're doing. We're fine with a four percent price increase, not a chicken brito that's thirty cents, but the fact that you increase wages to that extent, we like to eat a more. Chole CEO Brian Nicol has warned that Chipotle may raise prices again if cost pressures intensify. With the cost of eating out already at historic levels, consumers may just have

to get used to paying more. The industry is used to tep in inflation, call it two you know um level of inflation. They take, you know, a little bit of price to offset it flows through and margins are just naturally restored. The fact of the matter is labor was the pressure point. So the industry today is definitely sitting on a high single digit price versus what is typically a low single digit price inflation or level of menu price increase in relative terms. Everyone has to do this.

In fact, I would say, Carol, we we could be more patient than others because we own all of our restaurants. When you're a franchise organization. When you have franchise z s that have borrowed to invest in their business, they can't necessarily afford to let inflation eat away at their at their ability to pay the debt for very long. It is full speed ahead when it comes to store growth.

Chipotle just up to its goal to seven thousand from six thousand restaurants in the US, thanks in large part to strong performance at seeing its smaller towns based on we're are already in more than a hundred of them. Based on the ones that we're in, based on the results so far with our extraordinary we think there is

as many as almost a thousand more restaurants. And so even though you talking about a small town was you know, maybe thousand people, the sales volumes are almost the same as if you you know, we're in a city like

Chicago or a Chicago subber. But the investment costs are lower, the rents are certainly lower, and the operating costs are lower, so you end up getting higher margins and higher returning Chipolai reaps the full benefit of these returns since it owns and operates all its stores, and advantage that's not

lost on Wall Street. It's extremely unusual, and not only restaurants, but from a restaurant stock perspective, to have a large cap stock that's growing its unit level economic model, meaning the revenues are getting better and the margins are getting better as growth is accelerating. It's just it's like almost

unheard of. So there's little reason for Chipotle to begin franchising in the United States, but for the chains forty five international restaurants, Bloomberg Intelligence notes that partnering with local operators overseas might boost margins and accelerate expansion. We're open to the idea of some kind of franchise model. UM. You know, there are areas of the world where it's going to be harder for us to to own UM

and to run the businesses ourselves. When their process of bringing our digital system to Europe that's going really, really well. We've also opened up some alternative sites. It gives us great optimism that international is going to be a growth vehicle for us, and you know, hopefully not to distemputure. And that was Chipotle a CFO Jack Hardtime. You also heard the voice of Nicole Miller Regan. She's managing director

of at Pipers Stanley. You can catch the entire interview and episode of Chief Future Officer That's to night at nine pm Wall Street Time on Bloomberg TV and of course on our Bloomberg YouTube. Did you eat any chicken burritos? We did? Will you're out there? So I had some Guawk had had a bowl breada ball. I'm jealous right now. Good stuff. Hey, that's really great. I'm looking forward to

watching it. Thank you. It's really interesting to see the history that Jack has had with that company pre I p O and more so catch at pm tonight on Bloomberg TV. Yeah, but you let me drive? Oh no, no, no no, no, all right please, I'll do the bride revels. I don't want to drive. It's good question. This is good.

Drive to the clothes un on Bluebird Radio. We are driving towards the close on this Wednesday, bouncing around a little bit off our highs of the session, bouncing off our lows, but really tech stocks in particular Tim taking it on the chin down about Charlie mentioned more than two points down one point four percent, a little bit of a reversal than what we saw over the last four days. Carol four day rally on the sp F. So taking a little pause here. Aaron Kennon is co

founder and at CEO at Clear Harbor Asset Management. Eron manages at Clear Harbor over one billion dollars in assets. He joins us down on the phone from Stanford, Connecticut, Aaron, how are you due? Just fine? Tim, I hope everyone's well there. Yeah, we're doing well. Thank you. We'll help us make sense of this market here, because we certainly st I'm doing okay, but we don't know. It's a of environment. Let's be fair, all right, It's true there

is sort of the dark there. True, but you know, to be honest, there is a dark cloud not just you know, kind of hanging over international relations, but but also we're seeing that play out in the markets as well. Yeah, for sure. I mean looking at this market picture is

sort of interesting. You know. We've rallied off of that early low achieved in in March by call it nine or Tim and Carol, and we're only down called three to five percent on the equity side this year, whether you're talking about the MSc I all World or the smp AT. We're in the midst of a war. We have spiking rates since the beginning of the year. I think two's have gone from point seven three percent to where are they right now? To thirty one and uh

stubbornly high inflation picture along with wages, eye energy. And yet you know, the equity market has been somewhat resilient. And I do worry that the ebbing of liquidity that we will still very much see this year, that is to say, higher FED funds rates by more than two basis points, is already in the cards. And a disappearance of the fiscal stimulus which was extraordinary in two thousand

and twenty and twenty one. Well, well will eventually come to the four, into the psyche and into the market as it pertains to how investors think about equity valuations. Wait, so you think that the Fed, in terms of the moves that we will get this year already factored in

aaron in terms of the equity side. And no, no, I I worry that that we've seen this sort of shortcovering rally that the equity market um rally from from March eight to to date, which has been somewhat significant in the midst of all this negative news is is a bit of a head fake while we are very much of the view that time in the market is

more than important than time in the market. Um, you know, I think we're heading into stormy or weather over the next several weeks and perhaps months, and uh, I think investors are to be prepared for that. What do they need to do to prepare well? It's interesting, I think the sixty forty portfolio, at least year to date hasn't worked because you have fixed income that's off actually more

than equities. But I do think we're at a point where you've seen a significant rise in yields and the two year part of the curve, and you've seen ten year treasury yields rise as well, And so I think I think we're probably approaching a point over the next couple of months where fixed income probably becomes a little more anchored and a little more resilient, particularly if the growth profile decelerates in the U. S economy and the

global economy, which is what we expect. So I think the the sort of anti fragile asset that has historically been fixed income and perhaps gold and a couple of other things from time to time may come back into the four But we need to see a softening and a thawing on the inflation front, in addition to a reduction in the in the trajectory of growth for that fixed income as a class to sort of serve as ballast,

which it hasn't here to date. Well, and I do wonder, you know, Aaron, one of the I feel like every day we have this conversation, you know, have stocks bottomed, have yields topped out? So it sounds to me like what you're saying in terms of yields that maybe we have topped out a little bit. Well, I think we're certainly well, certainly, I suspect we're closer to the top

than we are the bottom. And I know that there are some other prognosticators out there who believe that this inflation will remain sticky for not just quarters but perhaps years that due to deglobalization and other dynamics that play that we're going to be at a significantly higher sort

of trend inflation rate. And I think if you look at long term inflation expectations as defined in the market through various metrics like inflation break evens and five or five year floating to fix metrics, even on the Bloomberg terminal, you'll see that inflation is Yes, it's risen for long

term expectations, but it's still somewhat anchored. And I think if that holds um, yes, perhaps we slightly higher inflation dynamic, But the notion that we're going to see runaway inflation, I think it's ultimately going to turn the FED from moving from an extraordinarily hawkish posture which will see this here into a slightly more significant, maybe even devish posture

in two thousand and twenty three. When you say inflation is anchored, you know, some people might be like, what right, Well, no, you know, so so like are you saying that inflation is anchored? And I would argue, I mean it's going to come down, like it's not going to stay where it is. Correct. So if you look at, for example, spot oil prices today relative to even one year from

now the futures market, there's backwardation. That's the case for even a lot of the soft commodities like like wheat, um, even even natural gas and so um. If you look at even the supply chain dynamic, which has led to a lot of inflation. The port of Long Beach, we're seeing significant thawing on the supply chain front. There. On the other hand, we're seeing COVID related problems in Asia which are leading to supply chain dynamics not not thawing.

But I think if you look ahead, if you take a sort of a more slightly more glass half full perspective here, and you look into two thousand, twenty three, twenty four in a post COVID world, god hope, a a post war in Ukraine world. I suspect the inflation picture will improve somewhat dramatically over the next twelve to twenty four months. Do you think inflation peaks? I do,

When do we start to see it go down? Well, I think the geopolitical uncertainty factor is certainly weighing on a part of that, which is the the energy component inflation, which is about depending on which inflation index you're looking at, And then the wage side. In the US, we've had an interesting dynamic. The labor participation rate is still not backed where it was pre COVID. It is in places like Canada, for example, but not the US. It's it

improved the last time around. We're gonna see nice doubt on Friday. Hopefully it indicates further improvement. But part of the inflation picture is wage concern wage stickiness, which can impact corporate margins. If labor participation rate increases and continues on trend to increase, I think that will probably alleviate some of those concerns as well. Yeah. Interesting perspective and

feels pretty grounded. Um, Aaron, thank you so much, Really appreciate Aaron Kennon, co founder in chief executive officer at Clear Harvard Asset Management roughly abilion in assets under management once again on the phone from Stanford, Connecticut. You know, he talks about the ebbing of liquidity. It's something we talked about with Abigail at the start, that there's still some nine trillion inequity out there, but you do wonder how quickly that gets sucked out of the system. Yeah,

that's a really good question. Um. Also interesting what he had to say about the rally that we've seen of late. Yeah, exactly, we've had quite a bounce back. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube, Star to Bloomberg, Bone, newsm